PDAC 2016: Potential capital gains tax hike could ‘decimate’ junior mining space

There is a few speculation that the authorities could hike the main city gains tax in its upcoming budget. Trent Mell thinks that may possess a devastating impact on the junior mining sector.

“You could decimate a business that’s already on its knees,” obama of PearTree Securities said in an interview.

His view is the fact that a capital gains hike could crush the marketplace for flow-through shares, which has been a key source of capital for the junior mining sector in excess of three decades. It is a unique type of stock issue that enables companies to pass through on (or literally “flow through”) greenfield exploration expenses to primarily high net worth investors, who can deduct them against taxable income.

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If the tax rises, these shares could become much less attractive to those investors, Mell said.

“We just hope the government is really informed on this issue,” he added.

PearTree is involved in a distinctive kind of flow-through share issuance in which the shares are donated to charity.